Author: Galaxy Research
Compiled by: TechFlow
From @glxyresearch's 2025 cryptocurrency predictions, covering the price trends of Bitcoin and Ethereum, the ETHBTC ratio, Dogecoin and D.O.G.E., stablecoins, DeFi, L2 solutions, policy, and venture capital. Here are the predictions we just shared with @galaxyhq clients and partners:
Bitcoin price is expected to break through $150,000 in the first half of 2025 and reach or exceed $185,000 in the fourth quarter
Adoption by institutions, corporations, and nation-states will be the main drivers of Bitcoin's price reaching new highs in 2025. Since its inception, Bitcoin's appreciation rate has outpaced all other asset classes, especially the S&P 500 and gold, and this trend will continue in 2025. Bitcoin's market capitalization is expected to reach 20% of the total gold market value.
The total assets under management (AUM) of U.S. spot Bitcoin ETPs will surpass $250 billion in 2025
In 2024, Bitcoin ETPs attracted over $36 billion in net inflows, becoming the best-performing ETP portfolio in history. Many top global hedge funds (such as Millennium, Tudor, and D.E. Shaw) have chosen Bitcoin ETPs, and according to 13F filings, the State of Wisconsin Investment Board (SWIB) also holds positions. In just one year, the AUM of Bitcoin ETPs is only $24 billion (19%) away from surpassing the total assets of all physical gold ETPs in the U.S.
Bitcoin will once again be one of the best-performing assets globally on a risk-adjusted basis in 2025
Bitcoin's exceptional performance is not only due to record-breaking inflows, but also driven by the price appreciation in 2024. According to risk-adjusted return metrics, Bitcoin ranks third among global assets, behind only a few top-tier assets. MicroStrategy, the self-proclaimed "Bitcoin Treasury," has particularly outstanding Sharpe ratio performance.
At least one top wealth management platform will recommend clients allocate 2% or more to Bitcoin in 2025
Due to factors such as investment familiarization, internal education, and compliance requirements, no major wealth management firm has officially included Bitcoin allocation in their investment recommendation portfolios. But this will change in 2025, further driving inflows and AUM growth for U.S. spot Bitcoin ETPs.
Five Nasdaq 100 companies and five countries will announce the inclusion of Bitcoin on their balance sheets or sovereign wealth funds
Whether for strategic needs, portfolio diversification, or trade settlement considerations, Bitcoin will gradually enter the balance sheets of major corporations and national-level investors. Particularly non-aligned countries, countries with large sovereign wealth funds, and even countries at odds with the U.S. will actively acquire Bitcoin through mining or other means.
- JW
Bitcoin developers will reach consensus on the next protocol upgrade in 2025
Since 2020, Bitcoin core developers have been discussing how to enhance the programmability of transactions by introducing new opcodes. By the end of 2024, the most supported opcodes include OP_CTV (BIP 119) and OP_CAT (BIP 347). Although Bitcoin's soft fork consensus is extremely rare and time-consuming, consensus is expected to be reached in 2025 to collectively push for the introduction of OP_CTV, OP_CSFS, and/or OP_CAT. However, this upgrade will not be activated in 2025.
More than half of the top 20 market cap listed Bitcoin mining companies will announce transformations or partnerships with hyperscalers, AI, or high-performance computing (HPC) companies by 2025
As AI drives increasing computational demand, Bitcoin miners will gradually retrofit existing facilities, build new infrastructure, or co-deploy mining farms with HPC companies. This trend will limit the annual growth rate of global hashrate, which is expected to reach 1.1 zetahash by the end of 2025.
These predictions outline a potential blueprint for the cryptocurrency market in 2025, filled with both opportunities and challenges.
- @intangiblecoins, @SimritDhinsa
The size of the Bitcoin DeFi market is expected to double by 2025
As of the end of 2024, over $11 billion in wrapped Bitcoin (such as WBTC) has been locked in DeFi smart contracts. More than 70% of the locked Bitcoin is used as collateral for lending protocols. Additionally, there are around $4.2 billion in deposits through the largest Bitcoin staking protocol, Babylon. The current total valuation of the Bitcoin DeFi market is $15.4 billion, and it is expected to see significant growth by 2025. This growth will come from multiple directions, including existing DeFi protocols on Ethereum L1/L2, new DeFi protocols on Bitcoin L2, and staking platforms like Babylon. Key drivers for the doubling of the market are expected to be: 150% year-over-year growth in cbBTC supply, 30% increase in WBTC supply, Babylon reaching $8 billion in TVL, and $4 billion in DeFi TVL on new Bitcoin L2 networks.
Ethereum price is expected to break through $5,500 in 2025
With the easing of regulatory pressure on DeFi and staking, Ethereum will reach a new all-time high in 2025. DeFi's collaboration with traditional finance may unfold in a new regulatory sandbox environment, allowing traditional capital markets to delve deeper into public blockchains, with Ethereum and its ecosystem being the primary beneficiary. Meanwhile, enterprises will gradually experiment with Layer 2 networks based on Ethereum technology. Some public blockchain-based games may find product-market fit, and NFT trading volume will also see a significant rebound.
Ethereum staking ratio is expected to exceed 50% by 2025
The U.S. government may provide clearer regulatory guidance for the crypto industry, such as allowing spot ETH ETPs to stake a portion of their held ETH. Demand for staking will continue to grow next year, and by the end of 2025, the amount of Ethereum staked may exceed half of its circulating supply. This will compel Ethereum developers to consider the network's monetary policy more seriously. The rise in staking ratio will also further drive demand and value inflows to staking pools (such as Lido and Coinbase) and restaking protocols (such as EigenLayer and Symbiotic).
The ETH/BTC ratio is expected to fall below 0.03 by 2025, but will rebound to above 0.06 by the end of the year
The ETH/BTC ratio is one of the most closely watched trading pairs in the crypto market. After Ethereum completed the "Merge" upgrade and shifted to Proof-of-Stake in 2022, the ratio has continued to decline. However, changes in the regulatory environment are expected to particularly support Ethereum and its application layer, especially DeFi, reigniting investor interest in the second-largest blockchain.
Economic activity on Layer 2 is expected to surpass other Alt L1 networks by 2025
The share of fees on L2 networks (currently in the single digits) is expected to exceed 25% of the total fees of Alt L1 networks by the end of the year. As L2 networks approach their scaling limits in the early part of the year, transaction fees may spike frequently, forcing the networks to adjust gas limits and blob market parameters. However, technical solutions (such as Reth clients or alternative virtual machines like Arbitrum Stylus) will improve the efficiency of Rollups, keeping transaction costs within acceptable ranges.
DeFi may enter the "dividend era" in 2025, with on-chain applications expected to distribute at least $1 billion in value to users and token holders
As DeFi regulation becomes clearer, the value-sharing mechanisms of on-chain applications will be expanded. Projects like Ethena and Aave have already started discussing or implementing fee mechanisms through proposals, which will allow users to directly benefit. Other protocols that previously opposed such mechanisms (such as Uniswap and Lido) may re-evaluate their positions due to regulatory clarity and competitive pressure. A more relaxed regulatory environment and increased on-chain activity suggest that protocols may perform buybacks and direct income distributions more frequently.
On-chain governance may be revitalized in 2025, with applications experimenting with futurist governance models
The total number of active voters in on-chain governance is expected to grow by at least 20%. On-chain governance has long faced two main issues: low participation and lack of diversity in voting (with most proposals passing by overwhelming majorities). However, with the easing of regulatory pressure and the success of Polymarket, these two issues are expected to improve by 2025. At that time, more applications will transition from traditional governance models to futurist governance models, enhancing voting diversity and optimizing governance outcomes.
The world's four largest custodian banks are expected to start offering digital asset custody services in 2025
The Office of the Comptroller of the Currency (OCC) plans to provide a policy path for national banks to custody digital assets, which will drive the world's four largest custodian banks - BNY Mellon, State Street, JPMorgan Chase, and Citibank - to launch digital asset custody services in 2025.
At least ten traditional finance-backed stablecoins are expected to be launched by 2025
From 2021 to 2024, the stablecoin market has grown rapidly, with currently 202 projects, some of which have established close ties with traditional finance (TradFi). Not only is the number of projects increasing, but the growth rate of their trading volume also far exceeds traditional payment networks, such as ACH (around 1% annual growth) and Visa (around 7% annual growth). In 2024, stablecoins are gradually being integrated into the global financial system. For example, the OCC-licensed FV Bank has supported direct stablecoin deposits, while Japan's three major banks have collaborated with Pax on the SWIFT network to enable faster and lower-cost cross-border fund transfers. Payment platforms are also actively building stablecoin infrastructure, such as PayPal launching the PYUSD stablecoin on the Solana blockchain, and Stripe acquiring Bridge to natively support stablecoins. Furthermore, asset management giants like VanEck and BlackRock are also partnering with stablecoin projects and actively positioning themselves in this space. As the regulatory environment becomes clearer, traditional financial institutions will further integrate stablecoins into their businesses to seize market opportunities and lay the foundation for future development.
- JW
The total supply of stablecoins is expected to double by 2025, exceeding $400 billion
The application of stablecoins in the areas of payments, remittances, and settlement is growing rapidly. With the gradual clarification of regulations on existing stablecoin issuers as well as traditional banks, trusts, and custodians, the supply of stablecoins is expected to experience explosive growth in 2025.
Tether's market share is expected to fall below 50% by 2025, challenged by yield-bearing stablecoins
Tether uses the income from its USDT reserves to fund its investment portfolio, but other stablecoin issuers and protocols are attracting users by offering yield-sharing mechanisms, which will cause existing users to shift from Tether to yield-bearing solutions. For example, the USDC rewards paid by Coinbase on its exchange and wallet balances will become a powerful draw, driving the entire DeFi space and potentially being integrated by fintech companies to enable new business models. As a response, Tether may start distributing the yields on its collateral assets to USDT holders, or even launch a competitive yield-bearing product, such as a market-neutral stablecoin.
Crypto venture capital (VC) total capital investment is expected to exceed $150 billion in 2025, with a year-over-year growth rate of over 50%
With declining interest rates and an improving crypto regulatory environment, investor interest in venture capital will significantly increase, driving a surge in VC activity. Crypto venture capital fundraising has historically lagged behind broader crypto market trends, and the next four quarters may see a "catch-up" phenomenon.
- @hiroto_btc, @intangiblecoins
Stablecoin legislation is expected to be passed by the U.S. Congress and signed by President Trump in 2025, but market structure legislation may not pass
Legislation establishing a registration and regulatory framework for stablecoin issuers is expected to pass with bipartisan support and be signed into law by the end of 2025. The growth in the supply of U.S. dollar-backed stablecoins will consolidate the global dominance of the U.S. dollar and further promote the development of the U.S. Treasury market. Combined with the relaxation of restrictions on banks, trusts, and custodians, the adoption of stablecoins is expected to grow significantly. However, market structure legislation (such as registration, disclosure, and regulatory requirements for token issuers and exchanges, or adjusting existing SEC and CFTC rules to cover these entities) is expected not to be completed and signed into law in 2025 due to its higher complexity.
The U.S. government is not expected to purchase Bit in 2025, but may use existing reserves to establish holdings and promote discussions on expanding Bit holdings among government departments and agencies
- @intangiblecoins
The U.S. Securities and Exchange Commission (SEC) is expected to investigate Prometheum, the first "special purpose broker-dealer"
Prometheum, a previously unknown broker-dealer, suddenly obtained a new type of broker-dealer license in 2023 and publicly supported SEC Chairman Gensler's views on the status of digital asset securities, raising widespread questions. Its CEO was questioned by Republican lawmakers at a congressional hearing, and according to FINRA records, Prometheum's alternative trading system (ATS) has not yet conducted any trades. Republicans have called on the Department of Justice and the SEC to investigate whether Prometheum is "connected to China", and there are also allegations of irregularities in its fundraising and financial reporting. Whether an investigation is launched or not, the "special purpose broker-dealer" license is expected to be abolished by 2025.
Dogecoin may break $1 for the first time in 2025, with a market cap expected to reach $100 billion
As the world's most famous and longest-running meme coin (memecoin), Dogecoin's market performance is expected to reach new heights in 2025. However, its peak market value may be surpassed by the budget cuts of the "Government Efficiency Department". The department is expected to identify and successfully implement measures to reduce more than the peak value of Dogecoin's market cap by 2025.
Disclaimer:
Members of Galaxy and/or Galaxy Research hold Bit, ETH, and Dogecoin. Many forecasts have not been shared, and there are more forecasts that could be presented. These forecasts are not investment advice and do not constitute an offer, recommendation or invitation to purchase or sell any securities (including Galaxy securities). These forecasts represent the views of the Galaxy Research team as of December 2024 and do not necessarily reflect the positions of Galaxy or any of its affiliates. These forecasts will not be updated.
